RPM Reports Fiscal 2013 Third-Quarter Results

- Third-quarter net sales increase 9% over prior year

- Net income increases 31% and diluted EPS increases 40%, on an as-adjusted basis

- Adjustments include accrual for prospective GSA settlement in roofing division

04 Apr, 2013, 07:30 ET from RPM International Inc.

MEDINA, Ohio, April 4, 2013 /PRNewswire/ -- RPM International Inc. (NYSE: RPM) today reported financial results for its fiscal 2013 third quarter ended February 28, 2013, which reflected strong operating performance, offset by two non-operating adjustments and certain other charges recorded during the quarter in the company's industrial segment.

"RPM achieved solid operating results in the quarter," stated Frank C. Sullivan, chairman and chief executive officer. "Net sales, net income and diluted earnings per share (EPS) all increased significantly, on an as-adjusted basis, driven by strong performance in all of our consumer segment businesses and in many industrial segment businesses. Together with accretive acquisitions, this performance helped offset weaknesses in our European operations and North American roofing business. The improvement was all the more noteworthy given the difficult comparisons to last year's strong third quarter during which RPM's sales and earnings grew to record levels as a result of the exceptionally mild weather throughout most of North America."

Third-Quarter Results

On an as-reported basis, net sales grew 9.1% to $843.7 million from $773.6 million. Consolidated earnings before interest and taxes (EBIT) were a negative $48.6 million, compared to EBIT of $27.1 million a year ago, due primarily to an adjustment for a $68.8 million accrual associated with an investigation of the company's Building Solutions Group roofing contracts with the U.S. General Services Administration (GSA). The substantial majority of the accrual relates to the sale of products and services from 2002 to 2008. The as-reported net loss for the quarter was $42.4 million, compared to net income of $6.6 million in the year-ago period. The diluted loss per share was $0.33, compared to diluted earnings per share of $0.05 in the fiscal 2012 third quarter. 

RPM's Building Solutions Group is in ongoing settlement discussions with the U.S. Department of Justice (DOJ) and the GSA aimed at resolving the investigation. The company is cooperating with the investigation, which involves compliance with certain pricing terms and conditions of GSA contracts under which RPM's Building Solutions Group roofing division sold products and services to the federal government. The actual amount of the company's loss, which remains subject to approval by the DOJ, may vary from the amount of the accrual.

The second non-operating adjustment for the quarter is associated with the company's decision to close an existing flooring business in Brazil in light of the Viapol acquisition there earlier this fiscal year. The impact of this decision resulted in a $6.1 million cumulative translation adjustment (CTA) write-off, which also triggered a $7.7 million tax benefit that impacted the current quarter as well. The net impact of this strategic repositioning of RPM's existing flooring business in Brazil was an increase to net income of $1.6 million or $0.01 per share.

"We are extremely excited about the establishment of a significant platform for RPM in Brazil with the Viapol acquisition, where we can leverage its substantial sales force, manufacturing facilities, broad distribution network and entrepreneurial management team to expand RPM's epoxy and polyurethane flooring presence," stated Sullivan.

On an as-adjusted basis, EBIT declined 3.1%, to $26.3 million from $27.1 million a year ago. The decrease in EBIT was primarily due to a $6.4 million unfavorable swing in foreign exchange losses on working capital balances at quarter end, principally related to the devaluation of the British Pound versus the Euro, and $4.1 million in non-operating expense changes, principally related to severance in Europe. Net income increased 30.8% to $8.7 million, compared to $6.6 million in the year-ago period. Diluted earnings per share were $0.07, up 40.0% from $0.05 in the fiscal 2012 third quarter.

Third-Quarter Segment Sales and Earnings

On an as-reported basis, industrial segment sales grew 6.1% to $532.3 million from $501.9 million in the fiscal 2012 third quarter. Organic sales improved 1.6%, including foreign exchange translation gains of 1.2%, while acquisitions added 4.5%. Industrial segment EBIT fell to a negative $66.3 million, including the impact of both adjustments referred to above. 

On an as-adjusted basis, industrial segment EBIT was $8.7 million, a decrease of $12.6 million from the prior year. This was principally due to the previously mentioned unfavorable swing in foreign exchange losses, which impacted this segment by $7.5 million, combined with $4.1 million in non-operating expense changes in Europe, as those businesses take appropriate actions to adjust to the difficult economic conditions continuing throughout the Eurozone.

"With the exception of our roofing division, most of our North American industrial businesses benefited from the gradual economic recovery in the U.S., especially our businesses serving commercial construction markets," Sullivan stated. 

RPM's consumer segment had a 14.6% increase in net sales to $311.4 million from $271.7 million in the fiscal 2012 third quarter. Organic sales improved 2.5%, including foreign exchange translation gains of 0.3%, while acquisitions added 12.1%. Consumer segment EBIT increased 61.6% to $34.7 million from $21.5 million a year ago.

"Our consumer segment continued to benefit from the introduction of new products, market share gains and increased consumer spending as the housing market continues its gradual recovery. We are particularly encouraged by the traction being gained by new products that are well beyond our traditional consumer price points and by increases in market share across virtually all consumer product lines. The recent acquisitions of HiChem in southern hemisphere Australia and Kirker, specializing in nail polish enamels, added to the strong consumer segment results as their business dynamics provide a counter to the historic seasonal low of most of RPM's core consumer businesses," stated Sullivan. 

Cash Flow and Financial Position

For the first nine months of fiscal 2013, cash from operations was $170.9 million, compared to $153.5 million in the first nine months of fiscal 2012. Capital expenditures during the current nine-month period of $45.7 million compare to depreciation of $41.9 million over the same time. Total debt at the end of the first nine months was $1.4 billion, up from $1.1 billion a year ago and at the end of fiscal 2012, due mainly to increased acquisitions. RPM's net (of cash) debt-to-total capitalization ratio was 49.8%, compared to 40.3% at May 31, 2012, primarily due to additional borrowings to fund acquisitions.

"At February 28, 2013, our total liquidity, including cash and long-term committed available credit, stood at $912 million," Sullivan stated. "As a result, we have plenty of resources to continue our robust acquisition program, which has added companies with annual sales totaling more than $225 million during the current fiscal year," stated Sullivan.

Nine-Month Results

On an as-reported basis, nine-month net sales grew 8.7% to $2.91 billion from $2.68 billion. Consolidated EBIT was $124.4 million, compared to EBIT of $256.7 million a year ago. As-reported net income for the nine-month period was $33.2 million, compared to net income of $133.4 million in the year-ago period. Diluted earnings per share were $0.25, compared to diluted earnings per share of $1.02 in the fiscal 2012 nine-month period. 

Adjustments affected nine-month results in both years. In fiscal 2013, the company incurred charges of $79.8 million in its Building Solutions Group roofing division, of which $68.8 million related to the current quarter GSA accrual and $11.0 million related to a first-quarter charge for the strategic decision to exit certain unprofitable contracts outside of North America. A $6.1 million pre-tax loss was also recorded during the current quarter when the company completed a repositioning of its flooring business in Brazil, which was more than offset by a tax benefit reflected in income tax expense.  In addition, the company recognized, during the first half of this fiscal year, a $56.1 million write-down of its equity investment in Kemrock Industries and Exports Ltd., due to continued deteriorating economic conditions in India, where Kemrock is based, and the resulting adverse impact on Kemrock's operating performance and stock price.

The fiscal 2012 year-to-date adjustment was for income recognized in RPM's industrial segment, which occurred when RPM's ownership position in Kemrock exceeded 20%, thereby triggering a reportable equity ownership position and resulted in a benefit of $5.2 million, including a $4.6 million cumulative income catch-up. 

On an as-adjusted basis, nine-month consolidated EBIT increased to $266.5 million from $251.5 million a year ago. Net income increased 13.9% to $146.0 million from net income of $128.2 million in the year-ago period. Diluted earnings per share were $1.10, compared to diluted earnings per share of $0.98 in the fiscal 2012 nine-month period. 

Nine-Month Segment Sales and Earnings

On an as-reported basis, sales for RPM's industrial segment increased 6.4%, to $1.93 billion from $1.81 billion in the fiscal 2012 first nine months. Organic sales were flat, including foreign exchange translation losses of 1.7%, while acquisitions added 6.5%. Industrial segment EBIT fell to $88.8 million from $192.0 million in the first nine months of fiscal 2012. On an as-adjusted basis, nine-month industrial segment EBIT declined 1.3% to $184.4 million from $186.8 million in the prior year.

In the consumer segment, nine-month sales increased 13.4% to $981.1 million from $865.2 million reported in the first nine months of fiscal 2012. Organic sales improved 4.9%, including foreign exchange translation losses of 0.5%, while acquisitions added 8.5%. Consumer segment EBIT improved 32.4%, to $132.1 million from $99.7 million in the first nine months a year ago. The consumer segment was unaffected by one-time adjustments.

Business Outlook

"For the full year, we now expect consumer segment sales to exceed the higher end of our targeted 8% to 10% range, while industrial segment sales will most likely fall short of the lower end of our previous 6% to 10% range.  Our guidance calls for consolidated net sales growth of 8% to 10% and net income growth of 9% to 12%, resulting in diluted earnings per share in a range of $1.80 to $1.85, on an as-adjusted basis.  Although we exceeded last year's third quarter results, we fell short of our internal plan by $0.03 per share as a result of the European expenses for foreign exchange and severance.  While we are hopeful of hitting our full year goals, this third quarter shortfall and continuing weakness in Europe and roofing will make this challenging," Sullivan stated.

Webcast and Conference Call Information

Management will host a conference call to further discuss these results beginning at 10:00 a.m. EDT today. The call can be accessed by dialing 866-700-6067 or 617-213-8834 for international callers. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. The call, which will last approximately one hour, will be open to the public, but only financial analysts will be permitted to ask questions. The media and all other participants will be in a listen-only mode.

For those unable to listen to the live call, a replay will be available from approximately noon EDT on April 4, 2013 until 11:59 p.m. EDT on April 11, 2013. The replay can be accessed by dialing 888-286-8010 or 617-801-6888 for international callers. The access code is 90961771. The call also will be available both live and for replay, and as a written transcript, via the RPM web site at www.rpminc.com.  

About RPM

RPM International Inc., a holding company, owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services serving both industrial and consumer markets. RPM's industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals. Industrial brands include Stonhard, Tremco, illbruck, Carboline, Flowcrete, Universal Sealants and Euco. RPM's consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement and by hobbyists. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane and Testors. Additional details can be found at www.RPMinc.com and by following RPM on Twitter at www.twitter.com/RPMintl.

For more information, contact Barry M. Slifstein, vice president – investor relations and planning, at 330-273-5090 or bslifstein@rpminc.com.

This press release contains "forward-looking statements" relating to our business.  These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us, and are subject to uncertainties and factors (including those specified below) which are difficult to predict and, in many instances, are beyond our control.  As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements.  These uncertainties and factors include (a) global markets and general economic conditions, including uncertainties surrounding the volatility in financial markets, the availability of capital and the effect of changes in interest rates, and the viability of banks and other financial institutions; (b) the prices, supply and capacity of raw materials, including assorted pigments, resins, solvents and other natural gas- and oil-based materials; packaging, including plastic containers; and transportation services, including fuel surcharges; (c) continued growth in demand for our products; (d) legal, environmental and litigation risks inherent in our construction and chemicals businesses and risks related to the adequacy of our insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon our foreign operations; (g) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (h) risks and uncertainties associated with our ongoing acquisition and divestiture activities; (i) risks related to the adequacy of our contingent liability reserves; (j) risks and uncertainties associated with the SPHC bankruptcy proceedings; and (k) other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in our Annual Report on Form 10-K for the year ended May 31, 2012, as the same may be updated from time to time.  We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.

 

CONSOLIDATED STATEMENTS OF INCOME

IN THOUSANDS, EXCEPT PER SHARE DATA

(Unaudited)

AS REPORTED

ADJUSTED (a)

Three Months Ended

Nine Months Ended

Three Months Ended

Nine Months Ended

February 28,

February 29,

February 28,

February 29,

February 28,

February 29,

February 28,

February 29,

2013

2012

2013

2012

2013

2012

2013

2012

Net Sales

$     843,736

$    773,643

$     2,907,876

$   2,675,646

$        843,736

$     773,643

$    2,910,754

$  2,675,646

Cost of sales

500,172

470,443

1,705,431

1,593,799

500,172

470,443

1,702,890

1,593,799

Gross profit

343,564

303,200

1,202,445

1,081,847

343,564

303,200

1,207,864

1,081,847

Selling, general & administrative expenses

318,638

277,456

955,339

833,553

318,638

277,456

944,751

833,553

Estimated loss contingency

68,846

-

68,846

-

-

-

-

-

Interest expense

20,506

17,897

58,804

53,612

20,506

17,897

58,804

53,612

Investment (income), net

(6,317)

(2,190)

(14,655)

(3,259)

(6,317)

(2,190)

(14,655)

(3,259)

Other expense (income), net

4,714

(1,399)

53,830

(8,369)

(1,373)

(1,399)

(3,349)

(3,159)

Income (loss) before income taxes

(62,823)

11,436

80,281

206,310

12,110

11,436

222,313

201,100

Provision (benefit) for income taxes

(20,631)

3,512

38,519

61,127

3,278

3,512

66,196

61,127

Net income (loss)

(42,192)

7,924

41,762

145,183

8,832

7,924

156,117

139,973

Less:  Net income attributable to noncontrolling interests

164

1,299

8,537

11,816

164

1,299

10,143

11,816

Net income (loss) attributable to RPM International Inc. Stockholders

$     (42,356)

$        6,625

$          33,225

$      133,367

$            8,668

$         6,625

$       145,974

$     128,157

Earnings (loss) per share of common stock attributable to

RPM International Inc. Stockholders:

Basic

$         (0.33)

$          0.05

$              0.25

$            1.02

$              0.07

$           0.05

$             1.11

$           0.98

Diluted

$         (0.33)

$          0.05

$              0.25

$            1.02

$              0.07

$           0.05

$             1.10

$           0.98

Average shares of common stock outstanding - basic 

129,013

128,121

128,900

128,072

129,013

128,121

128,900

128,072

Average shares of common stock outstanding - diluted

129,013

130,377

129,722

128,627

129,896

130,377

129,722

128,627

(a)  

Refer to the attached page for a reconciliation of as reported figures to adjusted figures presented above.

SUPPLEMENTAL SEGMENT INFORMATION

IN THOUSANDS

(Unaudited)

AS REPORTED

ADJUSTED (a)

Three Months Ended

Nine Months Ended

Three Months Ended

Nine Months Ended

February 28,

February 29,

February 28,

February 29,

February 28,

February 29,

February 28,

February 29,

2013

2012

2013

2012

2013

2012

2013

2012

Net Sales:

Industrial Segment

$     532,336

$    501,925

$     1,926,747

$   1,810,479

$        532,336

$     501,925

$    1,929,625

$  1,810,479

Consumer Segment

311,400

271,718

981,129

865,167

311,400

271,718

981,129

865,167

     Total

$     843,736

$    773,643

$     2,907,876

$   2,675,646

$        843,736

$     773,643

$    2,910,754

$  2,675,646

Income Before Income Taxes (b):

Industrial Segment

     Income (Loss) Before Income Taxes (b)

$     (68,643)

$      20,422

$          81,156

$      189,192

$            6,290

$       20,422

$       176,831

$     183,982

     Interest (Expense), Net (c)

(2,360)

(874)

(7,594)

(2,856)

(2,360)

(874)

(7,594)

(2,856)

     EBIT (d)

$     (66,283)

$      21,296

$          88,750

$      192,048

$            8,650

$       21,296

$       184,425

$     186,838

Consumer Segment

     Income Before Income Taxes (b)

$       34,720

$      21,531

$        132,069

$        99,796

$          34,720

$       21,531

$       132,069

$       99,796

     Interest (Expense), Net (c)

(15)

36

(34)

51

(15)

36

(34)

51

     EBIT (d)

$       34,735

$      21,495

$        132,103

$        99,745

$          34,735

$       21,495

$       132,103

$       99,745

Corporate/Other

     (Expense) Before Income Taxes (b)

$     (28,900)

$     (30,517)

$      (132,944)

$      (82,678)

$        (28,900)

$     (30,517)

$        (86,587)

$      (82,678)

     Interest (Expense), Net (c)

(11,814)

(14,869)

(36,521)

(47,548)

(11,814)

(14,869)

(36,521)

(47,548)

     EBIT (d)

$     (17,086)

$     (15,648)

$        (96,423)

$      (35,130)

$        (17,086)

$     (15,648)

$        (50,066)

$      (35,130)

     Consolidated

          Income (Loss) Before Income Taxes (b)

$     (62,823)

$      11,436

$          80,281

$      206,310

$          12,110

$       11,436

$       222,313

$     201,100

          Interest (Expense), Net (c)

(14,189)

(15,707)

(44,149)

(50,353)

(14,189)

(15,707)

(44,149)

(50,353)

          EBIT (d)

$     (48,634)

$      27,143

$        124,430

$      256,663

$          26,299

$       27,143

$       266,462

$     251,453

(a)

Refer to the attached page for a reconciliation of as reported figures to adjusted figures presented above.

(b)  

The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles in the United States (GAAP), to EBIT.

(c)  

Interest (expense), net includes the combination of interest (expense) and investment income/(expense), net.

(d)  

EBIT is defined as earnings (loss) before interest and taxes.  We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT as a performance evaluation measure 

because interest expense is essentially related to corporate acquisitions, as opposed to segment operations.  For that reason, we believe EBIT is also useful to investors as a metric in their investment 

decisions.  EBIT should not be considered an alternative to, or more meaningful than, operating income as determined in accordance with GAAP, since EBIT omits the impact of interest and taxes in determining

operating performance, which represent items necessary to our continued operations, given our level of indebtedness and ongoing tax obligations.  Nonetheless, EBIT is a key measure expected by and useful to our 

fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets' analysis of our segments' core operating performance.  We 

also evaluate EBIT because it is clear that movements in EBIT impact our ability to attract financing.  Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction 

with any debt underwriting or bank financing.  EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results.

CONSOLIDATED STATEMENTS OF INCOME

RECONCILIATION OF "AS REPORTED" TO "ADJUSTED"

IN THOUSANDS, EXCEPT PER SHARE DATA

(Unaudited)

Three Months Ended February 28, 2013

AS REPORTED

Adjustments

ADJUSTED

Net Sales

$        843,736

$              -

$     843,736

Cost of sales

500,172

500,172

Gross profit

343,564

-

343,564

Selling, general & administrative expenses

318,638

318,638

Estimated loss contingency

68,846

(68,846)

(1)

-

Interest expense

20,506

20,506

Investment (income), net

(6,317)

(6,317)

Other expense (income), net

4,714

(6,087)

(2)

(1,373)

Income (loss) before income taxes

(62,823)

74,933

12,110

Provision (benefit) for income taxes

(20,631)

23,909

3,278

Net income (loss)

(42,192)

51,024

8,832

Less: Net income attributable to noncontrolling interests

164

164

Net income (loss) attributable to RPM International Inc. Stockholders

$         (42,356)

$      51,024

$         8,668

Earnings (loss) per share attributable to RPM International Inc. Stockholders:

Basic

$             (0.33)

$          0.40

$           0.07

Diluted

$             (0.33)

$          0.40

$           0.07

(1)

Adjustment removes the accrual associated with an investigation of the company's Building Solutions Group roofing contracts with the U.S. General Services Administration.  The substantial majority of the accrual relates to the sale of products and services from 2002 to 2008.

(2)

Adjustment removes the impact of strategic repositioning of certain industrial segment subsidiaries located in Brazil. Included in the loss was the impact of an adjustment for accumulated foreign currency translation losses that were previously recorded as an unrealized foreign exchange loss in the currency translation account as a component of other comprehensive income.

Nine Months Ended February 28, 2013

Nine Months Ended February 29, 2012

AS REPORTED

Adjustments

ADJUSTED

AS REPORTED

Adjustments

ADJUSTED

Net Sales

$     2,907,876

$        2,878

$  2,910,754

$    2,675,646

$             -

$  2,675,646

Cost of sales

1,705,431

(2,541)

1,702,890

1,593,799

1,593,799

Gross profit

1,202,445

5,419

(3)

1,207,864

1,081,847

1,081,847

Selling, general & administrative expenses

955,339

(10,588)

(4)

944,751

833,553

833,553

Estimated loss contingency

68,846

(68,846)

(1)

-

Interest expense

58,804

58,804

53,612

53,612

Investment (income), net

(14,655)

(14,655)

(3,259)

(3,259)

Other expense (income), net

53,830

(57,179)

(5)

(3,349)

(8,369)

5,210

(6)

(3,159)

Income before income taxes

80,281

142,032

222,313

206,310

(5,210)

201,100

Provision for income taxes

38,519

27,677

66,196

61,127

61,127

Net income

41,762

114,355

156,117

145,183

(5,210)

139,973

Less: Net income attributable to noncontrolling interests

8,537

1,606

10,143

11,816

11,816

Net income attributable to RPM International Inc. Stockholders

$          33,225

$    112,749

$     145,974

$       133,367

$      (5,210)

$     128,157

Earnings per share attributable to RPM International Inc. Stockholders:

Basic

$              0.25

$          0.86

$           1.11

$             1.02

$        (0.04)

$           0.98

Diluted

$              0.25

$          0.85

$           1.10

$             1.02

$        (0.04)

$           0.98

(3)

Represents an adjustment for revised cost estimates in the Roofing Division of RPM's Building Solutions Group (industrial segment) in conjunction with unprofitable contracts outside of North America of $5,419 during the first quarter of fiscal 2013.

(4)

Adjustment includes $5,588 in Roofing exit costs and $5,000 of charges relating to Kemrock investment write-downs at RPM's Performance Coatings Group (industrial segment) during the first quarter of fiscal 2013. 

(5)

Adjustments include the write-downs of Kemrock investments, including $35,538 at Corporate and $4,735 at RPM's Performance Coatings Group (industrial segment) during the first quarter of fiscal 2013 and an additional $10,819 write-down at Corporate in the second quarter of fiscal 2013. Adjustments also reflect the $6,087 impact of the loss on repositioning of certain industrial segment subsidiaries in Brazil, as described in (2) above.

(6)

Adjustment removes the income recognized by the industrial segment related to RPM's equity method investment in Kemrock recognized during the second quarter of fiscal 2012 of $5,210, which included a $4,631 cumulative catch-up. Adjustment excludes approximately $0.4 million of net earnings recognized by the industrial segment for its share of Kemrock's earnings during the third quarter of fiscal 2012.

CONSOLIDATED BALANCE SHEETS

IN THOUSANDS

February 28, 2013

February 29, 2012

May 31, 2012

(Unaudited)

(Unaudited)

Assets

Current Assets

Cash and cash equivalents

$             247,104

$             272,178

$             315,968

Trade accounts receivable

674,357

640,780

772,048

Allowance for doubtful accounts

(31,703)

(27,381)

(26,507)

Net trade accounts receivable

642,654

613,399

745,541

Inventories

585,804

517,172

489,978

Deferred income taxes

22,352

16,438

19,868

Prepaid expenses and other current assets

253,545

265,245

239,982

Total current assets

1,751,459

1,684,432

1,811,337

Property, Plant and Equipment, at Cost

1,147,105

1,044,980

1,050,965

Allowance for depreciation and amortization

(672,657)

(642,199)

(632,133)

Property, plant and equipment, net

474,448

402,781

418,832

Other Assets

Goodwill

1,116,967

869,557

849,346

Other intangible assets, net of amortization

470,422

349,533

345,620

Other

109,625

107,782

134,885

Total other assets

1,697,014

1,326,872

1,329,851

Total Assets

$          3,922,921

$          3,414,085

$          3,560,020

Liabilities and Stockholders' Equity

Current Liabilities

Accounts payable

$             322,013

$             287,363

$             391,467

Current portion of long-term debt

3,557

3,238

2,584

Accrued compensation and benefits

121,593

123,807

157,298

Accrued loss reserves

34,007

26,621

28,880

Other accrued liabilities

249,786

147,080

144,911

Total current liabilities

730,956

588,109

725,140

Long-Term Liabilities

Long-term debt, less current maturities

1,392,381

1,099,460

1,112,952

Other long-term liabilities

435,553

253,939

381,619

Deferred income taxes

54,286

73,373

26,326

Total long-term liabilities

1,882,220

1,426,772

1,520,897

   Total liabilities

2,613,176

2,014,881

2,246,037

Stockholders' Equity

Preferred stock; none issued

Common stock (outstanding 132,506; 131,488; 131,555)

1,325

1,315

1,316

Paid-in capital

759,147

750,386

742,895

Treasury stock, at cost

(71,809)

(69,068)

(69,480)

Accumulated other comprehensive (loss)

(161,891)

(46,965)

(177,893)

Retained earnings

632,210

632,530

686,818

     Total RPM International Inc. stockholders' equity

1,158,982

1,268,198

1,183,656

Noncontrolling interest

150,763

131,006

130,327

     Total equity

1,309,745

1,399,204

1,313,983

Total Liabilities and Stockholders' Equity

$          3,922,921

$          3,414,085

$          3,560,020

CONSOLIDATED STATEMENTS OF CASH FLOWS

IN THOUSANDS

(Unaudited)

Nine Months Ended

February 28,

February 29,

2013

2012

Cash Flows From Operating Activities:

  Net income

$         41,762

$        145,183

  Adjustments to reconcile net income to net

          cash provided by operating activities:

               Depreciation

41,858

38,800

               Amortization

20,684

15,903

               Impairment loss on investment in Kemrock

51,092

               Estimated loss contingency, net of tax

52,635

               Deferred income taxes

4,461

(3,025)

               Stock-based compensation expense

12,354

9,873

               Other 

(1,166)

(6,127)

  Changes in assets and liabilities, net of effect

          from purchases and sales of businesses:

               Decrease in receivables

137,071

128,391

               (Increase) in inventory

(73,323)

(25,399)

               Decrease (increase) in prepaid expenses and other

                    current and long-term assets

12,931

(1,115)

               (Decrease) in accounts payable

(83,988)

(87,199)

               (Decrease) in accrued compensation and benefits

(39,696)

(28,222)

               Increase (decrease) in accrued loss reserves

6,305

(5,896)

               (Decrease) in other accrued liabilities

(10,905)

(40,013)

               Other

(1,213)

12,300

                    Cash From Operating Activities

170,862

153,454

Cash Flows From Investing Activities:

     Capital expenditures

(45,651)

(34,438)

     Acquisition of businesses, net of cash acquired

(396,951)

(151,180)

     Purchase of marketable securities

(82,054)

(58,853)

     Proceeds from sales of marketable securities

88,572

43,894

     Other

1,338

(1,751)

                    Cash (Used For) Investing Activities

(434,746)

(202,328)

Cash Flows From Financing Activities:

     Additions to long-term and short-term debt

318,994

22,148

     Reductions of long-term and short-term debt

(45,247)

(39,484)

     Cash dividends

(87,832)

(83,871)

     Repurchase of stock

(2,329)

(6,574)

     Other

3,750

6,151

                    Cash Provided By (Used For) Financing Activities

187,336

(101,630)

Effect of Exchange Rate Changes on Cash and 

     Cash Equivalents

7,684

(12,329)

Net Change in Cash and Cash Equivalents

(68,864)

(162,833)

Cash and Cash Equivalents at Beginning of Period

315,968

435,011

Cash and Cash Equivalents at End of Period

$        247,104

$        272,178

 

SOURCE RPM International Inc.



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